Nat Cartwright and Jake Tyler have a problem. The pair co-founded a new peer-to-peer mobile payments business last year while completing their MBAs at Madrid’s IE Business School, one of the continent’s finest according to international media. There the pair won a spot at a post-graduation business accelerator and were even offered one-year “Entrepreneur’s Visas” from the Spanish government.

They planned to continue building the business in Ms. Cartwright’s home city of Vancouver. Ms. Cartwright and Mr. Tyler claim Payso is the first startup in Canada to attack a wide-open peer-to-peer mobile payments space, which is expected to be a billion-dollar-market within five years.

A U.S.-based competitor Venmo, which is owned by PayPal, processed more than US$700-million in transactions in a single quarter in 2014.

To that end, they invested $20,000 of their own money in the company and hired a full-time technical lead who left a high-paying position at IBM to join the startup. While they are in discussions with several potential investors, the company’s future is now in limbo.

Mr. Tyler, an Australian, hasn’t been able to come to Canada on a permanent basis. The co-founders contend his best shot at staying is by obtaining a Startup Visa, a highly celebrated, yet hard to come by new class of visa.

Twenty months after the Startup Visa program was announced it has awarded only five visas to two companies. One law firm told Payso the process could take up to two years to finalize, at which time Ms. Cartwright says it’ll be too late.

“In one year, this is going to out there whether it’s our company doing it or someone else’s,” Ms. Cartwright said. “[The Startup Visa] seems like a great program but in terms of execution it doesn’t seem like it’s going to be that useful for us.”

Former Citizenship and Immigration Minister Jason Kenney first unveiled the Startup Visa program on April 1, 2013. The program’s goal is to make Canada the destination of choice for the world’s best and brightest entrepreneurs to launch their companies, with a full 2,750 available every year.

Its main requirement is that a company have the financial backing of a designated venture capital firm ($200,000) or angel investor group ($75,000), or a company must be accepted by a designated incubator or accelerator program.

You’ve got the minister going down to California to the Canadian Consulate in Los Angeles, huge billboards in Silicon Valley and the question is, what did they get out of the investment?

The Conservatives axed the old entrepreneur visa in February, which only required an immigrant to hire one Canadian for one year.

Still, people in the startup community are questioning why it has taken so long to hand out the visas. Because it is a five-year pilot program, there’s no guarantee the government will choose to maintain it past March 2018.

“Their efforts to move in this direction have failed completely,” said Betsy R. Kane, an Ottawa-based senior practitioner in Canadian immigration law at Capelle Kane Immigration Lawyers. “This is not rocket science. They had a cap of 2,750 and in two years they’ve had five people. Why can’t there be more uptake?”

Canada’s Citizenship and Immigration Minister Chris Alexander revealed that between 20 and 30 international companies have formally applied for Startup Visas with the backing of a designated third-party investor, and that a couple dozen more deals are being completed.

“I’m not at all bothered by the fact the numbers so far are small,” said Mr. Alexander, who added that the program was never meant to be on a massive scale. “We’re confident that the flow into the program will continue to grow but we want it to happen organically. We can’t force these things.”

Sources in the industry speculate that widespread knowledge of the program among international startups just isn’t strong. Moreover, they contend the best international startups will simply raise venture capital from a reputable firm without the hassle of applying for a Startup Visa.

“You’ve got the minister going down to California to the Canadian Consulate in Los Angeles, huge billboards in Silicon Valley and the question is, what did they get out of the investment?” said Ms. Kane, about the well-publicized advertising campaign the Canadian government embarked on last year, to encourage Americans to work in Canada. “I’m not sure they got any return.”

She said the program’s biggest problem is that the designated third-party investors aren’t interested in vetting foreign business plans for the government. They may be looking for the next BlackBerry, but without any external motivation or resources, they won’t devote serious effort.

“I’m not sure what the CIC was expecting of these independent third-parties, but certainly they’re not, from what I see, going to spend a whole lot of resources in vetting all potential immigrants who are knocking on their door,” she said.

Mr. Alexander admitted the work is an added burden on designated investors, but it’s one that comes with a comparative advantage. Only the firms that wanted to participate were those selected, he said.

Ms. Kane said those who are ultimately affected are entrepreneurs such as her clients Ms. Cartwright and Mr. Tyler, clients she said she has little to discuss with with unless they have the backing of a designated third-party.

For Ms. Cartwright, despite gaining the interest of several venture capital firms, her co-founder’s fate is a catch-22. “One of the first questions they ask is how long is your team available for,” said the co-founder. “Since we don’t have a visa it works against us in terms of getting investment.”

Marcus Daniels, chief executive of Highline, an accelerator program located in Vancouver and Toronto, is interested in Payso. Highline is one of 11 designated programs that can facilitate a company’s Startup Visa application. The CIC has also designated 27 venture capital firms and five angel investor groups.

Mr. Daniels estimates only 5% of all the startups applying to Highline are vying for the Startup Visa program. He doesn’t see this as a marketing problem on the government’s part, but rather a problem of the incubator and accelerator programs the government designated, because many of them aren’t mandated to actively recruit international teams.

“It’s never going to work if the entities don’t have an international mandate and a deal-hunting strategy for it,” Mr. Daniels said.

And there’s another concern: Of the 11 designated programs, it appears less than half have the ability to directly invest in the companies they accept into the program. Several merely offer mentorship and office space. “No top-tier international founder is going to do this without getting proper funding,” Mr. Daniels said.

GrowLab, Highline’s former accelerator incarnation, funded the Startup Visa program’s first two recipients, a pair of co-founders from the Ukraine. Mr. Daniels contends that Highline will lead the charge in finding international founders that meet the program’s requirements.

“I think this program will have to evolve with the times,” Mr. Alexander said. “Like the business sector as a whole, some [designated programs] are going to succeed and some are going to falter, and we need to take account of that.”

With no Startup Visa on the horizon, Ms. Cartwright and Mr. Tyler may have to return to Spain, where their entrepreneur visas are good for a year. But they aren’t giving up: “We’re going to fight really hard and we’re going to use every resource we can to make it work in Canada,” Ms. Cartwright said.

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